Question 1

Purchases of merchandise are typically credited to the merchandise inventory account under the perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 2

Calculate income from operations for Jonas Company based on the following data: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 764,000 \
\hline \text { Operating expenses } & 52,500 \
\hline \text { Cost of merchandise sold } & 538,000 \
\hline
\end{array}$$

Accepted Answer

A)  $485,500 
B)  $711,500 
C)  $173,500 
D)  $226,000 
A)  $485,500 
B)  $711,500 
C)  $173,500 
D)  $226,000

Question 3

There is no difference between the recording of cash sales and the recording of MasterCard or VISA sales.

Accepted Answer

A) True 
 B)False

Question 4

Gross profit minus selling expenses equals net income.

Accepted Answer

A) True 
 B)False

Question 5

On March 25, Osgood Company sold merchandise on account, $10,000, terms n/30. The applicable sales tax percentage is 7.5%. Record the transaction.​ $$\begin{array}{l}
\text { Journal }\
\begin{array} { | c | c | c | c | c | } 
\hline \text { Date } & \text { Description } & \begin{array} { c } 
\text { Post. } \
\text { Ref. }
\end{array} & \text { Debit } & \text { Credit } \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline
\end{array}
\end{array}$$

Accepted Answer

The answer of On March 25, Osgood Company sold merchandise...

Question 6

The entry to record the return of merchandise from a customer would include a

Accepted Answer

A)  debit to Sales 
B)  credit to Sales 
C)  debit to Customer Refunds Payable 
D)  debit to Estimated Returns Inventory 
A)  debit to Sales 
B)  credit to Sales 
C)  debit to Customer Refunds Payable 
D)  debit to Estimated Returns Inventory

Question 7

If the perpetual inventory system is used, an account entitled Cost of Merchandise Sold is included in the general ledger.

Accepted Answer

A) True 
 B)False

Question 8

Cost of merchandise sold is often the largest expense on a merchandising company income statement.

Accepted Answer

A) True 
 B)False

Question 9

When merchandise that was sold is returned, a credit to sales returns and allowances is made.

Accepted Answer

A) True 
 B)False

Question 10

Under the periodic inventory system, the journal entry to record the purchase of merchandise inventory will include a debit to

Accepted Answer

A)  Merchandise Inventory 
B)  Purchases 
C)  Accounts Payable 
D)  Cost of Merchandise Purchased 
A)  Merchandise Inventory 
B)  Purchases 
C)  Accounts Payable 
D)  Cost of Merchandise Purchased

Question 11

Merchandise with a list price of $4,700 is purchased on account, terms FOB shipping point, 1/10, n/30. The seller prepaid freight costs of $100. Prior to payment, $1,600 of the merchandise is returned. The invoice is paid within the discount period.Record the foregoing transactions of the buyer in the sequence indicated below, assuming a perpetual inventory system is used.
(a)Purchased the merchandise.
(b)Recorded receipt of the credit memo for merchandise returned.
(c)Paid the amount owed.

Accepted Answer

(a) Merchandise Inventory 4,75

Question 12

In a perpetual inventory system, when merchandise is returned to the supplier, Cost of Merchandise Sold is debited as part of the transaction.

Accepted Answer

A) True 
 B)False

Question 13

Abbey Co. sold merchandise to Gomez Co. on account, $35,000, terms 2/15, net 45. The cost of the merchandise sold is $24,500. Abbey Co. issued a credit memo for $3,600 for merchandise returned that originally cost $1,700. Gomez Co. paid the invoice within the discount period. What is the amount of gross profit earned by Abbey Co. on the above transactions?

Accepted Answer

Sales [$35,000 - 
($35,000 × 2

Question 14

Discuss the following statement:​"Operating cycles for all merchandising businesses are the same, with similar profit margins."​Include an example
(s) to illustrate your explanation.

Accepted Answer

This is not true. While the operations o

Question 15

The form of the balance sheet in which assets, liabilities, and owner's equity are presented in a downward sequence is called the report form.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following items should not be included in the cost of ending merchandise inventory?

Accepted Answer

A)  purchased units in transit, shipped FOB shipping point 
B)  purchased units in transit, shipped FOB destination 
C)  units on hand in the warehouse 
D)  sold units in transit, not invoiced, and shipped FOB destination 
A)  purchased units in transit, shipped FOB shipping point 
B)  purchased units in transit, shipped FOB destination 
C)  units on hand in the warehouse 
D)  sold units in transit, not invoiced, and shipped FOB destination

Question 17

In a merchandising business, operating income plus operating expenses is equal to

Accepted Answer

A)  cost of merchandise sold 
B)  cost of merchandise available for sale 
C)  sales 
D)  gross profit 
A)  cost of merchandise sold 
B)  cost of merchandise available for sale 
C)  sales 
D)  gross profit

Question 18

Complete the following data taken from the condensed income statements for merchandising Companies A, B, and C. $$\begin{array} { | l | r | r | r | } 
\hline & \text { Company A } & \text { Company B } & \text { Company C } \
\hline \text { Operating income } & \$ 315 & \$ ? & \$ 215 \
\hline \text { Sales } & ? & 865 & 560 \
\hline \text { Gross profit } & 430 & ? & 325 \
\hline \text { Operating expenses } & ? & 125 & ? \
\hline \text { Cost of merchandise sold } & 545 & 320 & ? \
\hline
\end{array}$$

Accepted Answer

? \[\begin{array} { | l | r | r | r | }

Question 19

$$\text { Match each of the following terms } ( a - h ) \text { with the correct definition below. }$$
-Shipping terms where the ownership of merchandise passes to the buyer when the buyer receives the merchandise.
a. Credit terms
b. FOB destination
c. FOB shipping point
d. Periodic inventory system
e. Perpetual inventory system
f. Inventory shrinkage
g. Single-step income statement
h. Multiple-step income statement

Accepted Answer

The answer of \[\text { Match each of the following...

Question 20

Bargain Wholesalers sells pet supplies to retailers including Pet World Supplies. Bargain Wholesalers uses a perpetual inventory. Journalize the following transactions:?May 4Bargain Wholesalers sells inventory to Pet World Supplies for $8,250 with terms 1/10, n/30. The cost of the merchandise is $5,755.7Bargain Wholesalers sells an additional $10,985 in inventory to Pet World Supplies with terms 1/10, n/30. The cost of the merchandise is $6,925.13Bargain Wholesalers receives a check from Pet World Supplies paying the balance due on both invoices.?? $$\begin{array}{l}
\text { Journal }\
\begin{array} {| l | c | c | c | c | } 
\hline \text { Date } & \text { Description } & \begin{array} { l } 
\text { Post. } \
\text { Ref. }
\end{array} & \text { Debit } & \text { Credit } \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline & & & & \
\hline
\end{array}
\end{array}$$

Accepted Answer

None

Exam 6: Accounting for Merchandising Businesses

Purchases of merchandise are typically credited to the merchandise inventory account under the perpetual inventory system.

Calculate income from operations for Jonas Company based on the following data: Sales \ 764,000 Operating expenses 52,500 Cost of merchandise sold 538,000

There is no difference between the recording of cash sales and the recording of MasterCard or VISA sales.

Gross profit minus selling expenses equals net income.

On March 25, Osgood Company sold merchandise on account, $10,000, terms n/30. The applicable sales tax percentage is 7.5%. Record the transaction.​ Journal Date Description Post. Ref. Debit Credit

The entry to record the return of merchandise from a customer would include a

If the perpetual inventory system is used, an account entitled Cost of Merchandise Sold is included in the general ledger.

Cost of merchandise sold is often the largest expense on a merchandising company income statement.

When merchandise that was sold is returned, a credit to sales returns and allowances is made.

Under the periodic inventory system, the journal entry to record the purchase of merchandise inventory will include a debit to

In a perpetual inventory system, when merchandise is returned to the supplier, Cost of Merchandise Sold is debited as part of the transaction.

Discuss the following statement:​"Operating cycles for all merchandising businesses are the same, with similar profit margins."​Include an example (s) to illustrate your explanation.

The form of the balance sheet in which assets, liabilities, and owner's equity are presented in a downward sequence is called the report form.

Which of the following items should not be included in the cost of ending merchandise inventory?

In a merchandising business, operating income plus operating expenses is equal to

Complete the following data taken from the condensed income statements for merchandising Companies A, B, and C. Company A Company B Company C Operating income \ 315 \ ? \ 215 Sales ? 865 560 Gross profit 430 ? 325 Operating expenses ? 125 ? Cost of merchandise sold 545 320 ?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Filters

On March 25, Osgood Company sold merchandise on account, $10,000, terms n/30. The applicable sales tax percentage is 7.5%. Record the transaction. Journal Date Description Post. Ref. Debit Credit

Discuss the following statement:"Operating cycles for all merchandising businesses are the same, with similar profit margins."Include an example (s) to illustrate your explanation.